DOW JONES NEWSWIRES
Franklin Resources Inc.'s (BEN) fiscal second-quarter net income
tumbled a more-than-expected 70% amid lower fee revenue and
tumbling assets under management as the bottom line was also hurt
by investment losses.
Shares of the mutual-fund company fell 3.35% premarket to $58.53
in early trading Tuesday; through Monday the stock was down roughly
45% since September.
Money managers have struggled as investors shift from stock
funds into lower-fee bond and money-market funds and reduced asset
balances weigh on margins. Rivals Invesco Ltd. (IVZ) and T. Rowe
Price Group (TROW) reported steep quarterly profit declines, with
Rowe slashing its work force by 5%.
For the quarter ended March 31, Franklin reported net income of
$110 million, or 48 cents a share, down from $366.1 million, or
$1.54 a share, a year earlier. The latest period included $26
million in investment write-downs and a net $33.9 million in
investment and other losses, while the prior year included $32.4
million in investment and other income.
Revenue slid 40% to $912.3 million, as investment-management
fees tumbled amid a 39% year-to-year drop in assets under
management to $391.1 billion.
Analysts polled by Thomson Reuters most recently were looking
for earnings of 62 cents on revenue of $898 million.
Operating margin fell to 24.5% from 34.5%.
Assets under management fell 6% from the previous quarter as
fund outflows slowed to $5.5 billion from $18.2 billion in the
fourth quarter and $6.1 billion a year earlier. Equity holdings
declined to 44% of total assets from 47% at the end of last year,
while fixed income rose to 35% from 32%.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com